20160921-兴业证券-A-Share_Daily_Express_19页_919kb

Summary of Industrial Securities Co., Ltd. Report

Core Content

This report provides an overview of the Chinese and Hong Kong stock markets, along with insights into the fixed income market and specific company analyses. It includes market indices, sector performance, daily headlines, investment strategies, and company-specific updates.

Main Market Indices

The market saw a slight decline in most indices, with a total trading volume of CNY 356.20 billion, an increase of 3% from the previous day. Losers outnumbered winners by 1615-to-1044.

Sector Review

Winners

• Environmental Protection: Driven by enthusiasm for PPP concept sectors, with companies like Beijing Orient Landscape & Ecology Co. (002310) and Inner Mongolia M-Grass Ecology And Environment (Group) Co. (300355) showing strong performance.
• Coal Miners: Benefited from rising coal prices and the government's de-capacity policy, with Shanxi Coking Co. (600740) and Jizhong Energy Resources Co. (000937) seeing gains of 6.21% and 3.40%, respectively.
• Construction: Companies like Chengdu Road & Bridge Engineering Co. (002628) and Hangxiao Steel Structure Co. (600477) outperformed the market with gains of 9.94% and 8.25%, respectively.

Losers

• Aviation Equipment Manufacturers: Continued weak performance, with Avic Electromechanical Systems Co. (002013) and Avic Aircraft Co. (000768) down by 2.06% and 1.53%, respectively.
• Nuclear Power: Profit-taking selloffs after a surge on Monday, with Anhui Yingliu Electromechanical Co. (603308) and Shenzhen Woer Heat-Shrinkable Material Co. (002130) down by 2.49% and 1.94%, respectively.
• Liquor Makers: Underperformed, with Kweichow Moutai Co. (600519) and Jinhui Liquor Co. (603919) down by 1.72% and 1.49%, respectively.

Daily Headlines

• China's Ministry of Finance selected about 1 trillion yuan worth of additional PPP projects.
• Samsung Electronics clarified that the combustion of Galaxy Note 7 devices in China was likely due to external heat sources, not battery issues.
• China banks had a net forex client sales of 21.7 billion yuan in August.
• Baoshan Steel plans to transfer 4.9% stake to two cos. as part of state-owned enterprise reforms.
• Beijing aims to limit its resident population to 23 million by 2020.
• LeEco raised $1.08 billion for its electric car project.
• Egypt is in talks with China for $4 billion in loans, including $1 billion for sewage and $3 billion for renewable energy.
• Rising home prices in China may hinder the PBOC from cutting interest rates.

Investment Strategies

Fixed Income Weekly - Wait Patiently for Better Opportunities

• Fluctuations in rates products, strong performance of credit bonds, and liquidity tightening are observed.
• The credit bond market provides support to rates products due to increased leverage and abundant money supply.
• The interest rate spread has narrowed due to ample money supply, but the yield curve has flattened due to tightened liquidity and de-leverage concerns.
• The bond market is becoming less profitable, and investors are advised not to chase high prices.

HK Stock Market Strategy - Global Wealth Allocation Gathering Pace

• The Hong Kong stock market is expected to start a bull run, with strong inflow of global funds.
• Investment strategy includes buying high-quality assets at low prices, focusing on growth stocks, stocks covered by Shenzhen-Hong Kong Stock Connect, and overseas businesses.
• The market may face volatility due to potential interest rate hikes and U.S. presidential elections.

Company News

• Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH):

  • Sunshine Insurance Group increased its holding to 5% after purchasing 5.6 million shares.
  • The company's Q3 report is expected to outperform due to a low base effect.
  • Long-term growth is anticipated due to brand effect, distribution advantage, and mature management.
  • The current P/E ratio is less than 18x, and the dividend yield is nearly 3%, making it an undervalued opportunity.
  • Recommendation: Buy (Maintained)

• Beijing Ultrapower Software (300002.SZ):

  • Fast growth over the past seven years with a 25.11% CAGR in revenue.
  • The company's game business is recovering, contributing to overall earnings.
  • EPS forecast: CNY 0.28 in 2016, CNY 0.35 in 2017, and CNY 0.42 in 2018.
  • Recommendation: Buy (Maintained)

• Shandong Nanshan Aluminum (600219.SH):

  • Despite a drop in aluminum prices, the company made a profit of CNY 560 million.
  • The company is expected to recover earnings in the second half of 2016.
  • EPS forecast: CNY 0.08 in 2016, CNY 0.14 in 2017, and CNY 0.18 in 2018.
  • Recommendation: Buy (Maintained)

Real Estate Sector

• Mortgage Loan Demand: Increased significantly in August, indicating sustained real estate growth.
• PBOC Data: RMB loan growth reached CNY 948.7 billion, with household mid/long-term loans growing by CNY 528.6 billion.
• Investment Inflow: Lack of other investment opportunities has increased inflow into real estate, supported by commercial banks and insurance companies.
• Recommendation: Most real estate companies' stock prices are below intrinsic value, suggesting good investment opportunities.

Key Financial Data

• Market Rate:

  • Shibor: ON 2.13%, 1W 2.39%, 2W 2.52%, 1M 2.69%, 3M 2.79%
  • Interbank Repo: ON 2.16%, 1W 2.62%, 2W 2.86%, 1M 3.07%, 3M 2.78%
  • Exchange Repo: ON 3.61%, 1W 1.86%, 2W 2.03%, 1M 2.45%, 3M 2.50%

• Bond Yield:

  • Treasury Bond: 1Y 2.17%, 3Y 2.45%, 5Y 2.57%, 7Y 2.76%, 10Y 2.76%
  • CDB Bond: 1Y 2.24%, 3Y 2.79%, 5Y 2.97%, 7Y 3.17%, 10Y 3.11%

• Government Bond Future:

  • TF1612: 101.44
  • TF1703: 101.10
  • T1612: 100.98
  • T1703: 100.56

Conclusion

The Chinese A-share market showed mixed performance with a slight decline, driven by concerns over the Fed's meeting and a strong performance in certain sectors like environmental protection and coal. The bond market remains challenging due to tightened liquidity and improving economic fundamentals. Investors are advised to be cautious and focus on undervalued opportunities. The Hong Kong stock market is expected to experience a bull run, with a focus on high-quality assets and growth stocks. Key companies like Yili Industrial Group and Beijing Ultrapower Software are recommended for investment due to their strong fundamentals and growth potential.